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Volatility: The Necessary Evil Of Cryptocurrency And How To Handle It

Part of what has cemented cryptocurrencies on the map since they exploded into the mainstream investor market has been their volatility. Investors flooded to the likes of Bitcoin when, through November and December 2018, the value of the cryptocurrency increased in value exponentially.

However, such volatility is a two-edged sword, and the cryptocurrency market has shown that in 2018 with Bitcoin’s price shedding more than 50 percent at times from its year end price of $13,000.

The cryptocurrency market has also felt the ill effects of Bitcoin’s volatility because as a result of the price drops, Bitcoin’s trading volume, and even interest in the digital currency realm also decreases. The danger is that volatility can cause a large exodus of investors to occur which severely dents the hopes of other cryptocurrencies gaining mass adoption status.

Volatility should be at the center of attention if there is to be a future in which crypto is used widely in day-to-day instances.

However, it requires a lot of bravery, and some tactical know-how, to successfully navigate the lows, in order to keep oneself safe, and sane, as well as contribute positively to a burgeoning crypto economy.

Why volatility is important, but deadly

There is a lot to be said for the role that volatility played in helping cryptocurrencies reach the mainstream market.

Cryptocurrencies, and Bitcoin in particular, only made it into the mainstream media stream as a tool of the dark web when the infamous Silk Road was shut down. Back then, it was far from being considered a good investment for Wall Street types, but they soon joined the party.

Suddenly, banks, the thought leaders of banking and financial institutions all had an opinion on Bitcoin – many of them thought it was a fad, or even rat poison and far too volatile to take seriously, but conversations about Bitcoin were starting to be held in investment circles.

The Chicago Board Options Exchange (CBOE), and the Chicago Mercantile Exchange (CME) introduced Bitcoin futures trading on the 18th and 10th of December 2018 respectively. Goldman Sachs and Barclays are rumoured to be looking into crypto trading desks, and people could not get enough of this crazy asset that could double in price in a matter of weeks.

Stories of Bitcoin billionaires and overnight millionaires cropped up, and the individual investors flooded to be a part of the massive wave of Bitcoin mania.

This is why volatility was so important in establishing cryptocurrencies as a potential asset that could also be adopted as a currency in mainstream society. However, this same volatility is also what could kill that goal.

Itai Cohen, CEO of Homelend, a mortgage crowdfunding platform has noted to Cointelegraph that within their scope of property and mortgaging, they see volatility as something that drives investors away from the cryptocurrency market and into more stable investments such as the housing market. Their aim is to try and transcend the cautious housing investors while catering to a new, bolder investor who embraces this volatility.

“The high volatility of crypto-assets is the result of investors’ reliance on the so called ‘adoption syndrome’ – where the perception of an asset’s value is mostly based on expectations about its adoption by the community.”

“I believe that this is a key factor, more so because perceptions are much more volatile for a digital asset than for ‘real-world’ assets like gold, real estate, corporate profits or government backed currencies. In other words, there is a big gap between the physical world and the digital one.

“The mortgage industry is a perfect example of an industry that seems to be helping bridge the gaps, same as the real estate industry or any other industry that has a foothold in the ‘real’ world.”

The problem is, if people enter crypto when the market is at its most Bullish, profiting off the upward volatility, they need to be strong enough to stomach it at its most Bearish, and the volatility takes a big down swing.

How to handle volatility

Handling volatility is nothing new for institutionalized investors. Assets, stocks, bonds, and even forex is prone to swings, but the problem is that cryptocurrency volatility is off the charts.

Additionally, investors in cryptocurrency are often new to the game and have not experienced the range of swings before – watching their money both grow, and shrink substantially by the hour.

As the stock market having been around far longer than the cryptocurrency one, it is a good place to begin. Their tips in handling these sickening lows, and highs, are relevant and can be carried across to crypto trading.

Just like in the cryptocurrency space, there are long term investments and short term investments in the stock market. Roger Ma, founder at Lifelaidout, a certified financial planning company in New York, explained how, in stocks, it is important to not forget about your time horizon:

“Investing in stocks rewards you in the long term. These day-to-day changes in the market shouldn’t affect you.”

This reflects very much in the same vein as the so-called ‘Hodl’ strategy for cryptocurrencies. Essentially, the strategy says that there is no need to let ‘day-to-day changes affect you’ rather just hold onto your cryptocurrency to avoid the volatility altogether.

Ma also mentions another strategy which shares similarities with cryptocurrency – dollar cost averaging. Under this strategy, you buy an investment on a fixed schedule. This investment strategy essentially stops you from making rash moves into, and out of, the marketplace.

“As long as you have a good plan in place and have thought about the time horizons where you need the money, then the slightly small moves in the market shouldn’t matter to you.”

The Dow Jones has been known for its big drops, even over the course of just one day. Scott Hanson, founder and senior partner at Hanson McClain Advisors, made an important note on these kinds of drops.

“A 250-point drop for the Dow today is only about a one percent decline. But that same drop when the Dow was at 10,000 would have been a 2.5 percent fall.”

This basically speaks out about the bigger picture, and how important it is to zoom out of the charts. For Bitcoin, just six months ago, in October 2017, people were celebrating wildly that Bitcoin had broken the $6,000 mark. However, a few times already this year, people were panicking that Bitcoin would hit $6,000.

Safe havens

There are times however, when even seasoned investors in crypto feel the pinch and want to either take profit, or a high, and escape the market. But, escaping the market for an investor is difficult if that money is designated for assets.

Many have seen value in diversifying their portfolios, not only across cryptocurrencies, but also hedging their bets with some more stable assets, primarily gold.

Gold

Gold is an asset that is almost synonymous with stability, and, it has a long running history with cryptocurrency as its antithesis. There have been times where it is apparent that gold and cryptocurrencies have inverse relationships with the precious metal speaking in times of crypto lows.

Daniel Marburger, director of Europe-based online gold dealer Coin Invest said that gold coin sales increased fivefold on Jan.16, the same time cryptocurrencies were crashing.

“[Tuesday] was a hell of a crazy day,” Marburger said, adding that “emails and phones did not stand still with customers asking how they could turn their crypto into gold.”

Even before cryptocurrencies, gold was known to spike in times of stock market volatility as its value tends not to move in line with other assets such as equities or property.

Cash

Cash is another safehaven that crypto investors easily flock to when the cryptocurrency market takes a dive, as it is as simple as selling the digital currency for something that is at least usable in day-to-day life.

The issue with turning digital currency to cash is that the value of cash is constantly shifting but slowly, losing value, and as an investable asset, it really is not a good bet.

Similarly, as a safe haven for cryptocurrency the problem is that a dreaded cycle of selling low and buying high can develop as investors sell their assets in times of lows, and buy them back when the market is booming again, and probably, over valued.

The Value of a Dollar

Image source: U.S Bureau of Labour Statistics

Bonds

Bonds issued by governments are generally perceived as safe haven investments because the general view is that countries are often more financially secure than companies, and more stable than cryptocurrency. However, if the bond issuer can’t meet interest payments or repay the capital when it’s due, you could lose your whole investment, and it has happened before, even in economies as big as China’s.

All of these safe havens primarily have ways in which a crypto investor can escape the volatility of the market and protect their assets from falling to far. However, the primary issue is that they are taking their investment totally out of the crypto economy, and with the volatility, it is often hard to get back in, and profit, when the markets are green.

Guy Melamed, CEO of Zeex, a company that tries to mitigate crypto volatility by turning them into things such as gift cards, reiterates the point that by leaving the cryptomarket totally in search of a safe haven means that there is a gamble about getting back in when the time is right.

“Even though top cryptocurrencies such as Bitcoin and Ethereum have made tremendous progress within the last few years, the latest dips in the market have had many investors understandably looking for safe havens where they can park their wealth without dropping out of the crypto market.”

“Many will turn to conventional safe havens like gold, stable-coins and exchange-traded funds. But it’s hard to buy low when the whole herd is stampeding in the same direction. What we’ve found in our work, is that inflation tracking crypto gift cards can be stable because they are linked to inflation and not speculation.”

A duty to weather the storm

There is evidence to suggest the volatility of Bitcoin is lessening, that the wild swings are not as wild, and that they are in fact getting more manageable over time. This has a lot to do with the rise in adoption and the distribution of Bitcoin across a vast and varied market.

On the other side of things, volatility is also sometimes prized. Arthur Hayes, the CEO of BitMEX, a Bitcoin mercantile exchange, trades in volatility and sees it as important to the space.

“I am a volatility trader at the end of the day,” Hayes said. “We make our money if it is volatile. If it goes up or it goes down, if you have Bill Gates calling it a fraud, then short it – I don’t care. Or, if you think it is going to be one mln dollars in a few months, great! Buy it, still don’t care, we just match trades.”

But, according to Daniele Bernardi, the founder of the PHI Token and researcher on cryptocurrencies, volatility is lessening, and it is because not everyone is after that ‘three-digit return’.

“The extreme volatility that characterizes the cryptoworld today is clearly linked to the very high yields they have generated in recent years. If we want the crypto to continue to offer triple-digit returns as an asset class, it is inevitable that volatility must remain high. Even if the same is also linked to liquidity, for which the crypto community will inevitably grow the more we will mitigate the returns to the volatility, Bernardi told Cointelegraph.”

“This is already happening, because the volatility of Bitcoin in the first years of life was more than 300 percent per year, while now it varies between 50 and 100 percent per year. Currently there are no asset classes that have similar volatility except for the volatility of the VIX index which is a volatility indicator in turn.”

Volatility

It requires those who are invested in Bitcoin, and other cryptocurrencies, to stick with it and work through the volatility in order for the digital currencies to survive, and thrive.

Mainstream adoption has kicked off in earnest, but it requires a lot of hard work from those who are in the market now, to stay in it, and to ride out this storm. Once the volatility is under control, a new wave of adoption can surely kick off.

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South Korean Central Bank: Crypto And Blockchain To Provide Cash-Free Society

South Korea’s central bank, the Bank of Korea (BOK), has recently announced it is considering cryptocurrencies and blockchain applications for its project for a “cashless society,” local news TokenPost reports May 1.

According to TokenPost, BOK announced the official launch of its cash-free society pilot in its “2017 Payment Report” yesterday. The report mentioned that the bank has started exploring possible uses of blockchain and cryptocurrency, such as applying blockchains and passwords to payments.

The bank has also established an organization for researching digital currency and analyzing possible effects of cryptographic money on the overall financial system.

The major goals of the project are customer convenience and reducing the cost of producing physical currency. In 2016, South Korea reportedly spent KRW 53.7 bln ($47 mln) on issuing physical currency.

The government also plans to use the initiative as a means by which to open the underground economy, which is mostly cash-driven. Kwak Hyun-soo, an analyst at Shinhan Investment Corp said:

“It can open the underground economy, and thus enhance equivalence in taxation. The shoe box full of 50,000 won banknotes that you see in movies will disappear in reality (with the advancement of a cashless society).”

According to KoreaTimes, the South Korean government began considering phasing out physical money in 2016, and planned to become a “cash-free society” by 2020. In April 2017, the BOK launched a coinless society trial, in which customers could deposit small change from transactions and put them on a prepaid or mobile card to use at convenience stores, discount stores, and department stores.

In January, inter-ministerial division on cryptocurrency policy confused the South Korean public when the Ministry of Justice independently declared it would ban cryptocurrency trading. Following a petition, the Minister of Finance said that the government would not ban crypto trading, which was eventually confirmed by the Minister of the Office for Government Policy Coordination in February.

Last week, Cointelegraph reported that South Korea’s largest crypto exchange Bithumb is pushing for the adoption of digital currencies in the country. The exchange aims to evolve into a bank-like business in order to make the use of cryptocurrency in daily life more intuitive.

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Crypto vs. Cash – How the Numbers Stack Up on Drugs, Guns, Murders

In a Reddit AMA, technology visionary Bill Gates lost a lot of fans when he gave his opinion on Bitcoin, honing in on a pretty weak argument for its use. It’s “used for buying fentanyl and other drugs, so it is a rare technology that has caused deaths in a fairly direct way,” Gates expressed.

But, Bill, drugs have been around for much longer than Bitcoin has, and people have been buying them for centuries, so how ever did they manage before this digital currency came along?

Blaming a tool for its unintended use is quite foolish. Yes, drugs can be bought with Bitcoin, as can life-saving medical procedures. You see, this digital currency is just that, a currency, like US Dollars, Nigerian Naira, Thai Baht and Russian Ruble, all which are equally adept at buying drugs.

Harping back

There was a time where because of circumstances, Bitcoin was used often for buying of illegal substances, from drugs to guns and even hitmen. This all resulted from dark web marketplaces such as the infamous Silk Road.

Bitcoin was the currency choice on the Dark web, as it had many attributes that suited this shady underworld. It was decentralized, anonymous and digital. Bitcoin was thus the only way people could buy these illegal substances – on this marketplace.

Bitcoin was still quite unknown, and a very small fish in terms of its market cap and in comparison to any other currency, asset or market. But during this period, its primary use was probably for illegal activities.

But, as Bitcoin has organically grown and been adopted into more mainstream markets, the use of the digital currency as a Darknet staple has been declining. There is empirical evidence that Bitcoin, itself, is falling out of favor as a currency on the darknet, but statistically, mainstream adoption means less “criminals” are holding and spending Bitcoin.

What the numbers say

In a recent paper published in January this year at the University of Sydney Business School, some numbers were quantified when it comes to Bitcoin buying and illegal activities.

“We find that illegal activity accounts for a substantial proportion of the users and trading activity

in Bitcoin,” the paper reads. “For example, approximately one-quarter of all users, 25 percent, and close to one-half of Bitcoin transactions, 44 percent, are associated with illegal activity.”

“Furthermore, approximately one-fifth, 20 percent, of the total dollar value of transactions and approximately one-half of Bitcoin holdings, 51 percent, through time are associated with illegal activity.”

“These users annually conduct around 36 mln transactions, with a value of around $72 bln, and collectively hold around $8 bln worth of Bitcoin.”

Looking at these numbers, currently, there are almost 28.5 mln Bitcoin wallets that hold more than 0.001 BTC according to data compiled by Bitinfocharts.com.

However, most Bitcoin users have several wallets and use multiple wallet addresses to increase their financial privacy when transacting. Hence, the number of users is likely less than that number.

But to counter that, there will be a lot of inactive wallets, and a number of other factors that shift this number around. Therefore, it really comes down to an estimate, and hence, around 20 mln Bitcoin users globally can be considered as a fair estimate.

So, the numbers stand at five million users of Bitcoin have bought illegal goods with it. And 10 million illegal transactions happen annually. Additionally, just over half of the Bitcoin in circulation has been used for illegal activities.

These are big numbers, but when it comes to comparisons to other payment options, it starts to shine a light on just how small the Bitcoin drug trade is.

What about guns and murder?

Part of the fear that whirls around Bitcoin is that it was not only used for buying drugs but, especially when it came to the Silk Road, it was apparently a tool for purchasing weapons as well as hitmen.

However, the truth of the matter is that while guns could be purchased on the Silk Road, and with Bitcoin, they account for a very small portion of sales.

Nicolas Christin, assistant research professor of electrical and computer engineering at Carnegie Mellon University, is one of the researchers behind a recent deep-dive analysis of sales on 35 marketplaces from 2013 to early 2015.

He states:

“Weapons represent a very small portion of the overall trade on anonymous marketplaces.There is some trade, but it is pretty much negligible.”

Drugs are far more common. Specifically, MDMA and marijuana each account for about 25 percent of sales on the dark web, according to Christin’s research. But weapons are so uncommon that they were lumped into the “miscellaneous” category, along with drug paraphernalia, electronics, tobacco, Viagra, and steroids. Together those account for maybe three percent of sales.

Chart

Image source: www.andrew.cmu.edu

In comparison, albeit legal, gun purchases in the US alone account for a huge number of data with regards to background checks shows.

The figures show that there were 16,808,538 applications for gun licenses in 2012. If they were approved, that would be enough weapons to stock a member of NATO’s armed forces nearly five times over.

Traces of cocaine

To straightaway put this into context, the report from Sydney reads that half of Bitcoin has at some stage been used for illegal purchases. Then, a report conducted just on US Dollars, and relating just to cocaine, says that 90 percent of bills hold traces of the white powder.

In the same paper, which outlined the numbers for Bitcoin drug buying, another report is cited from the US White House Office of National Drug Control Policy that estimates the drug users in the United States, in 2010, spent around $100 bln annually on illicit drugs.

So in contrast, the initial report outlines that annually: “36 mln transactions, with a value of around $72 Billion” occur with Bitcoin, meaning that 44 percent of $72 bln – $31.6 bln – is spent annually, globally, on drugs.

Yet, in the US alone, in 2010, $100 bln was spent on drugs.

The vast majority of drug users still purchase illicit substances via more ‘traditional’ methods. According to a 2017 Global Drug Survey, regardless of country, less than half of drug users purchase substances via the dark web in any one country. The global median for a percentage of drug users who use the darknet is 10.1 percent.

2017: Have you obtained drugs from darknet markets in the last 12 month?

Image source: www.globaldrugsurvey.com

No special guilt

The fact of the matter is Bitcoin is used for illegal activities and substances, but there should be no special guilt attached to it. It is a tool of the internet, and with online purchases, across all sectors, growing, it is unsurprising that this currency that only exists online comes into play.

Online payments are constantly growing as more and more people turn away from cash, with Sweden, the leader in becoming a cashless society. These online payments give the opportunity to people to buy goods and services online.

But, because credit and debit card purchases online for drugs and illegal goods are not possible, or certainly not smart, people look for other opportunities. The ease and convenience of buying online extends to the illegal markets, and just because there is a tool to do it with, doesn’t mean that the tool is the enemy.

Drugs are the enemy, and while they continue to exist, so will means to purchase them. Still, though, cash is king when it comes to drug purchasing, yet, there are no calls to ban the USD despite $100 bln worth contributing to the drug epidemic.

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Jack Dorsey: Square Will Go Further With Bitcoin Than Buy/Sell Option

Jack Dorsey, CEO of San Francisco-based payment service Square, revealed the company’s plans to focus on developing increased options for Bitcoin (BTC) use in a conference call Tuesday, Feb. 27 with Market Watch.

Dorsey, who is also the CEO of Twitter, specifically discussed the company’s Cash App, which now allows all users to buy and sell Bitcoin, telling Market Watch:

“Bitcoin, for us, is not stopping at buying and selling. We do believe that this is a transformational technology for our industry, and we want to learn as quickly as possible.”

According to Square’s 2017 Q4 report, also published Feb. 27, the company’s total net revenue and adjusted revenue have significantly increased compared to Q3 of 2017. Specifically regarding Bitcoin use in Square’s Cash App, the report stated positively:

“Additionally, customers can now buy and sell Bitcoin in Cash App. We observed that this was a feature our customers wanted, and we support Bitcoin because we see it as a step in the long-term path toward greater financial access for all.”

Currently available in 50 US states, Cash App allows its users to carry out instant fiat transactions, free cash-outs, and instant Bitcoin buy/sell option, which  was first launched for a limited part of users in November, 2017. On Jan. 31, Square released the Bitcoin buy/sell option to almost all users.

Earlier today, Cointelegraph reported that J.P. Morgan Chase released an annual report for 2017 to the US Securities and Exchange Commission (SEC) yesterday, Feb. 27, in which the company lists cryptocurrency as a “risk factor” for its future business.

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Bitcoin, Ethereum, Bitcoin Cash, Ripple, IOTA, Litecoin, Dash: Price Analysis, December 22

The views and opinions expressed here are solely those of authors/contributors and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Over the last 24 hours, the crypto market has fallen by  more than 30 percent. There is a combination of events that might have triggered it. Litecoin’s founder selling all his coins in this rally is certainly a sentiment breaker. This might look like he believes the elevated levels were a good position to cash out completely.

While his selling doesn’t end the future of Litecoin, it certainly dampens the sentiment and we can see it reflect on the other cryptocurrencies as well.

Elsewhere, a large individual trader or a group of traders placed an options bet on the New York-based digital currency trading platform LedgerX, that Bitcoin will rally above $50,000 by end-2018. Right now, it seems to be an overly optimistic assumption. However, anything can happen in a year’s time. If someone had told me in January 2017 that Bitcoin will climb close to $20,000 during the year, I would not have believed it.

Nonetheless, the bull market tops out when the sentiment is overly bullish, especially with the retail traders. Using the Wayback Machine, we find that the whales have been trimming their positions, while the smaller traders have been piling on Bitcoin over the period of the year. Professional’s selling is never a good sign.

Though in the past year, every fall has been a buying opportunity and the aggressive bulls have made a lot of money, we believe that, now, the traders should wait and not venture out to buy until we see some semblance of a support forming.

But won’t we miss out buying at lower levels?

We may! But, we will also sleep peacefully and enjoy the holidays without any major worry, should the cryptocurrencies extend their fall.

BTC/USD

We have not traded in Bitcoin for a while because we did not get the right setup to enter. Though we missed out on a large uptrend, at least we did not get caught in the frenzy. To the lucky few who are owning Bitcoin, we have warned in our previous two analysis reports that the cryptocurrency is at a risk of breaking down.

BTC/USD

In our previous analysis, we had warned that if Bitcoin failed to rise above the trendline, it will break below $15,200 and that is what happened. The attempt to rebound off $15,200 failed on Dec. 20 and today the cryptocurrency has plunged even below our expected support levels of $12,505.

What’s next?

We may find a number of aggressive bulls buy at the current levels of the BTC/USD pair and continue buying till the 50-day SMA of $11,000. However, we believe that we shouldn’t try to catch a falling knife. As the selling has been overdone, we may find a bounce soon, but, if it fails to sustain, it’ll break loose. We may see the fall extend to even $10,000 levels.

So, let’s wait for the correction to end before initiating any long positions.

ETH/USD

We had warned the traders of a deeper fall, should Ethereum breakdown of the trendline. Today, it did and plunged.

ETH/USD

The ETH/UDS pair has a strong support at $500 and below that at the 50-day SMA at $455. If these also don’t hold, then the price will fall to $400 levels.

We suggest waiting for a few days until Ethereum forms a bottom. Currently, there are no buy setups on it.

BCH/USD

Traders who followed us on Bitcoin Cash entered long positions at $1,520 and exited 50 percent positions at a handsome profit of $3,859 and the remaining position was closed at $2,400, which was our trailing stop loss. Though our revised target objective was $4,514.5173, we recommended booking partial profits because Bitcoin Cash has a history of plunging from the highs.

BCH/USD

The BCH/USD pair rose to a high of $4,139.0893 and reversed course. It has broken below the 20-day EMA and the 61.8 percent Fibonacci retracement levels of the rally from $1,145 to $4,139.0893.

We expect the cryptocurrency to find some support at the 78.6 percent retracement levels of $1,785.

However, this is only an expectation. We should take any fresh position only when Bitcoin Cash forms a bottom. Until then, we recommend staying on the sidelines.  

XRP/USD

In our previous analysis, we had forecast that Ripple will resume its uptrend once it breaks out of the pennant formation. Yesterday, the cryptocurrency broke out of the bullish pennant and skyrocketed higher.

XRP/USD

The pattern target of the bullish formation breakout was $1.5 and yesterday, the XRP/USD pair rallied close to a high of $1.2.

However, today, it is being clobbered.

It is because of this possibility that we keep mentioning to trail the stops higher. As it has broken below the pennant formation, it has become negative. It is difficult to call a bottom, but it may find some support at the $0.6 mark.    

IOTA/USD

We had expected range-bound trading in IOTA unless it broke out and closed above the overhead resistance. However, the bears have a firm grip on the IOTA/USD pair.

IOTA/USD

Today, the cryptocurrency broke down of the lower end of the range. At one point, the fall had extended to $1.1.

In such a volatile environment, we would not like to venture out and buy. The sentiment is too negative. We shall wait for the selling to exhaust before initiating any buy position. It is useless to mention any support levels when traders are selling in a panic.

LTC/USD

We had forecast a range bound movement between $243.86 and $370. While yesterday, the cryptocurrency bounced off the supports, it was not spared today.

LTC/USD

Litecoin is currently at the 61.8 percent Fibonacci retracement level, which is a critical support for the LTC/USD pair. If this breaks, we can see the fall extend to the $146.414 levels, which is the 78.6 percent retracement of the rally.

We don’t want to be brave during a panic. We want to wait and watch for buying to emerge before initiating any position.

DASH/USD

We foresaw a short-term top in Dash in our previous analysis and it has been falling ever since.

DASH/USD

We expect a strong support at the trendline in, which is just below the 78.6 percent retracement level for the DASH/USD pair. We expect this level to hold.

However, we don’t recommend buying until the decline ends. The cryptocurrencies can easily overshoot on the downside.

Please note that after such a sharp fall, we are bound to see strong bounces on a few cryptocurrencies. However, we believe in safeguarding our capital first and investing with a calculated risk. With this philosophy, we miss many trades; however, we are less prone to drawdowns as well. At least, let’s enjoy the holidays without any stress.

*The market data is provided by Trading View.

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Bitcoin Has Less Environmental Impact Than Fiat Currencies

The risks of environmental impact because of Bitcoin mining have been widely touted, but a recent report indicates that the actual damage from Bitcoin mining may well be far less than that associated with fiat currencies and other industries.

Data centers, gold mining and cash production all consume substantially more energy than Bitcoin mining.

The report indicates that the annual consumption of power from Bitcoin mining is 8.27 terawatt-hours per year, more than Ireland and other small nations. Nevertheless, this number is actually only an eighth of what data centers in the US consume annually, and the global production of fiat currencies stands at 11 terawatt-hours per year.

Gold mining burns a staggering 132 terawatt-hours per year. What’s more, these numbers don’t even include the massive amount spent on vaults, banks, security systems and more to keep the physical cash and precious metal safe.

FUD

The environmental impact of Bitcoin mining has been widely touted, particularly by those who believe it to be a non-legitimate currency, but it appears these accusations are more fear, uncertainty and doubt (FUD), rather than actual facts.

These reports do not take into consideration the actual costs of other types of value production, all of which consume resources. In point of fact, Bitcoin consumes less energy than its non-digital equivalents

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Rolls-Royce For Sale – Owner Wants Bitcoin

As Bitcoin continues to become far more commonplace in everyday life, more people are starting to sell lucrative items for virtual currency.

The housing market is slowly adopting Bitcoin as a payment method, a number of online platforms accept virtual currencies and you can even buy games on Steam.

It seems this also applies to collectors items, including luxury vehicles.

A Manchester car owner has listed his Gold Rolls-Royce Ghost for sale on Autotrader, but his asking price is not in pounds but in Bitcoin.

A brand new Rolls-Royce Ghost is valued at over £230 000 – but with just under 50,000 km on the clock, you could snap this up for the equivalent of £117,000 in Bitcoin.

According to the Daily Mail, the owner is happy to be paid in Bitcoin, which has been on a massive bull run culminating in a $12,000 high this week:

“Why not trade in Bitcoin? I treat it in exactly the same way as normal currency these days. It’s safe, convenient and incredibly valuable right now so, to me, it makes sense to trade my car this way. It’s the future.”

The 2010 Ghost Model also comes with a personalized number plate – for an added fee. Complete with a 6.6-liter engine, the Gold car is as luxurious as its price tag.

Rol

The most mind-boggling thing about this sale is that if you had bought £12,000 worth of Bitcoin at the beginning of 2017 and held onto it – you would be able to buy golden Rolls-Royce.

Expect more of this in the future

As the world gears up for launch of Bitcoin futures in the coming weeks, the demand for the virtual currency is bound to grow. Whether or not people decide to hold onto their Bitcoin or sell, there will be a flood of people looking to get into the market.

With more people wanting Bitcoin, we’re likely to see more ‘everyday’ transactions made with the virtual currency. Why not sell more items for Bitcoin as the value of the currency grows?

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New Fed Appointee May Be Driving Bitcoin To All-Time Highs

As Bitcoin destroyed the $12,000 level earlier today, many pundits and analysts looked for answers for why. The solution may not be in anything about the cryptocurrency, but more about the newest nominee to the Federal Reserve (Fed), Marvin Goodfriend.

Goodfriend has been hailed both as a visionary and as the ‘worst Fed nominee of all time,’ depending on which news source is reporting. However, the newest potential Fed member may be having a positive impact on the Bitcoin market. His anti-cash views have been criticized as a form of monetary strangulation and government control into personal finance like nothing the US has seen to date.

Below zero

The appointee has previously voiced his opinion that paper money keeps financial freedom in the hands of the individual – a scenario he does not like should a crisis occur.  During a crisis, the Fed generally lowers the interest rates to increase borrowing power for consumers and businesses alike.

The problem is that should the Fed desire to lower interest rates to something under zero on savings or checking accounts individuals could simply withdraw paper money from their accounts to keep from losing money. This freedom to protect the value of money does not sit well with Goodfriend, who posits that cash thereby limits the power of the Fed to control the economy.

This sort of stringent monetary policy may well be the cause of the recent spike in Bitcoin. Should such strong-handed government policies come to fruition, a digital, decentralized currency presents a method for trading and interaction that is outside of Federal Reserve control.

Certainly other factors have contributed to the price bump, but Goodfriend may end up being a friend to Bitcoin, inadvertently.

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Cash is King for Reasons Bitcoin Struggles With: Survey

The idea that cash is becoming obsolete is perhaps a little flawed. With so many different payment methods available, from credit and debit cards, and now digital currencies, many would think that cash, as an outdated payment method, may be falling away.

A recent survey has shown that cash is only six percent down on debit cards as people’s prefered payment method. A lot of it has to do with its simplicity as well as security.

People still prefer cash

According to a recent study by Cardtronics and Edelman Intelligence, which surveyed 1,000 people in May and June, cash was prefered by 27 percent of people, while debit cards were on top with 33 percent preferring them.

Digital currencies fared quite well, with 15 percent of people saying it was their prefered method of payment. The survey also showed that there are payment methods that are nearly obsolete, as only three percent backed cheques.

Most Preferred Payment Method

This survey was performed on an American audience, but it is not the only one of its kind. A similar survey was conducted in the Asian markets, where again it came out that cash still held a large majority for preferred payment methods.

Lessons to be learned for Bitcoin

There has to be a reason why a payment system that is as old as cash is still around today, and still so popular. It is perhaps a lesson that digital currencies like Bitcoin should heed.

The survey theorised that cash held such sway because it is the simplest form of payment, but it is also a very safe and practical form of payment. Digital currencies are still notoriously difficult to use, let alone understand for the average citizen, while they are also prone to hacks and scams.

The company which conducted the survey said 84 percent of respondents are worried about data security, and two-thirds said they make payment decisions based on which form is considered the most secure, up six percent since 2016.

Compromised

It is not just digital currency security concerns that are keeping people clutching their dollar bills, credit and debit card fraud is still a huge problem, and a factor in many people’s thinking when choosing a payment method.

The threat posed when using digital currencies is different to that of credit and debit fraud, but it also far more scary because there are no guarantees from a central authority.

Harley J. Spiller, author of “Keep the Change: A Collector’s Tales of Lucky Pennies, Counterfeit C-Notes, and Other Curious Currency,” likes paper money for another reason: It’s simple.

“My phone crashes, my computer dies, but my penny collection from when I was five is still here,” he said quite simplistically, but quite rightly. “When it’s on the screen, it all feels like a piece of glass. Coins have ridged edges — there’s something to touch and fidget with. The rest is in the cloud, and I don’t get it. I don’t have a direct connection.”

Millennials' Attitudes Towards Cash

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Portugal Joins Spain, France in Cash Crackdown, Bitcoin Will Benefit

Portugal has banned cash payments over €3000 as part of a crackdown on anonymous payments.

A new package of rules which came into force Aug. 23 makes payments over the limit punishable by a fine of up to €9000.

“For taxpayers not involved in business, the limit and fine are €10,000 and €4500 respectively. Payment of taxes in cash over €500 is also banned.”  

The restrictions on cash come several years after similar moves by neighboring Spain within the context of a cash focus from many major economies.

Especially notable this year were India’s demonetization and increased cash controls, along with plans by Australia to outlaw cash as early as 2022.

Spain, meanwhile, cut the maximum permitted cash transaction from a €2500 limit set in 2012 to just €1000, itself moving in line with France.

Bitcoin increase

At the same time, Bitcoin interest both countries is increasing. Spain is contributing more and more to the Blockchain industry, with 4000 new Bitcoin outlets appearing in July this year.

Meanwhile, Portugal has been noticeable with its lack of an official stance on cryptocurrency.

The central bank issued general notes of caution in 2014, but is yet to update its position to include fashionable instruments such as ICOs.

In June, Cointelegraph launched a dedicated version of its website in Portuguese to cater for the increasing number of readers from both Portugal and South America.